Martin Gamble on US markets: SpaceX slumps as Disney and Lilly shine

US stocks bounced back this week on renewed hopes for a resolution in the Middle East and a broadly reassuring set of corporate updates.

The technology sector also regained some of its equilibrium after a period of volatility, helping propel the Nasdaq index forward.

AI software outfit Palantir was among the top risers. Its second-quarter earnings came in well ahead of expectations and guidance for the full year was significantly upgraded, CEO Alexander Karp signalling bumper demand would last for at least the next 18 months.

Tech-focused consultancy Gartner also beat forecasts with its own quarterly numbers, driving demand for its shares.

The losers included memory chip play Western Digital, despite its own bumper profits, as valuations in that sector continue to come back down to earth and Honeywell Aerospace which was hit by supply chain issues.

SpaceX hit by AI capex concerns

The much-anticipated maiden quarterly earnings came in better than analysts expected with revenues almost doubling year-on-year and losses shrinking more than forecast.

However, as other technology companies have discovered of late, investors are getting antsy around the amount of capital expenditure committed to the AI infrastructure buildout.

SpaceX spent $18.4 billion in the quarter, most of it on AI, which was higher than the $13.2 billion anticipated by analysts, and a significant step-up from the $10.1 billion outlay in the first quarter.

Chief financial officer Bret Johnsen tried to investor allay fears, insisting: “The current economics have translated into a less than one-year payback on our new capital deployments for compute.”

Johnsen said SpaceX had signed another $6.7 billion in cloud computing contracts since the end of the quarter and was on track to reach a $100 billion annualized revenue run rate by the end of the year.

For context, the AI division reported revenues of $2.5 billion in the quarter just ended. Management expects capex to remain at current levels for the rest of 2026, implying full year expenditures of around $66 billion.

Despite share price volatility around the results, the shares made gains this week, but they remain around 15% below the price at which they came to market on 12 June.

Blockbuster release of Toy Story 5 boosts Disney

The release of Toy Story 5 sprinkled some stardust over Disney’s latest quarterly results. Group revenue for the fiscal third quarter rose 7% year-on-year to $25.3 billion, while total segment operating income adjusted earnings per share increased 28% to $2.06, comfortably ahead of market expectations.

The success of the latest Toy Story instalment, which has reportedly passed $1 billion at the global box office, underlined how effectively Disney can monetise its intellectual property when the machine is working properly. The film helped drive Entertainment revenue 6% higher to $11.3 billion and operating income up 64% to $1.7 billion, while consumer products delivered $1.1 billion of revenue, its strongest year-on-year growth in five years.

Recently appointed CEO Josh D’Amaro will hope the performance gives fresh impetus to a share price which has largely stalled since he took over in March. He is also looking to sharpen the group’s structure, moving much of consumer products under the studios operation from the 2027 financial year, and strengthening shareholder returns with the help of $1.2 billion proceeds from the sale of Disney’s 50% stake in A+E Global Media to Hearst.

Eli Lilly boosted by earnings beat and upgrades

The drug maker’s second quarter sales and profits substantially outpaced analysts’ expectations driven by strong demand for Lilly’s weight-loss and diabetes treatments.

Sales surged 48% year-on-year to $23 billion which prompted the obesity giant to hike its full year sales guidance to a range of $85 billion to $87 billion, from $82 billion to $85 billion previously.

Despite trimming the top end of its projected range for full year earnings per share to between $35.5 and $36.5, it was comfortably ahead of the average analysts’ estimate of $34.2 per share.

The strong results are likely to reassure investor worries about pricing pressures and competition from Danish obesity drug maker Novo Nordisk which launched the first oral weight loss pill in January 2026.

Lilly recently launched its oral pill Foundayo which reported sales of $98 million in the quarter, missing analysts’ forecasts of $105.6 million.

The company said the launch continues to gain traction with the last week of July seeing double the number of prescriptions compared with the previous month.

Shares in Lilly are up 11% in 2026, slightly behind the 13% gain in the S&P 500 index.